So why do some businesses stick with cash?
With all of these convenient changes to retail payments, why would any business still want to go cash-only?
The ATO reported that as many as 40% of Australian businesses haven’t looked into electronic payments at all and only 10% have looked at making the switch in the past year. This is attributed to transaction fees and a ‘sticking with what you know’ attitude amongst more established local merchants.
While the idea of paying a fee for each transaction might be hard to stomach, research suggests that when handling and staff time are taken into account, electronic payments cost $0.09 less on average than their cash equivalent.
And even though almost 63% of surveyed retailers prefer to deal in cash, that just doesn’t align with the Australian public’s view — with over half preferring to pay by card.
It’s also worth noting that processing fees have reduced significantly over the past 20 years. The Reserve Bank estimates an average fee of 0.5 – 1% for debit cards, and up to 2% for major international credit cards like American Express.
Location can also make a difference
One other large factor for retailers choosing to go cash-only is their physical location. Many shop owners who are located in lower socio-economic areas sometimes have a majority of customers who simply don’t have any other form of payment.
On the surface, this may seem reasonable, but any business with this sort of model risks losing out on customers who don’t carry cash.